Mixed data sees USDCAD dip below 12950

USDCAD, H4                   

U.S. personal income rose 0.4% in May with spending up 0.1%. The 0.4% April income gain was revised down to 0.3%, while the 0.4% spending gain not revised. Compensation edged up 0.1% from the prior 0.5% gain. Disposable income increased 0.5% from 0.3% (revised from 0.4%). The savings rate rose to 5.5% from 5.1% (revised from 5.3%). Meanwhile, in Canada the GDP grew 0.2% in April after the 0.5% gain in March. The increase in April GDP was as-expected. All of the growth was in service producing industries, which improved 0.3% in April after the 0.4% gain in March. The report is consistent with slower, but still solid, momentum in Canada’s economy at the beginning of Q2, and hence does not challenge the BoC’s upbeat take on the economy.

USDCAD initially tumbled to near nine-month lows of 1.2946 following the mix of data from either side of the border. Since then, the pairing recovered to 1.2985, with short covering prompted by the cooler Canada price data. Month and quarter end buying could be a feature through the session, though the decidedly hawkish tangent the BoC has embarked upon this week will limit USDCAD gains going forward. The H4 chart shows a severely over sold pair with RSI registering session lows of under 13.

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Stuart Cowell

Senior Market Analyst


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